GOKUL CHAND Vs. BHONRI LAL

JUDGEMENT

(1.) IN this appeal, the only question, which requires determination, is as to whether the defendant No. 3, who is the appellant before us, had taken any other step in the proceedings within the meaning of Section 34 of the Arbitration Act, 1940.

(2.) WE have carefully looked into the record of the case The order -sheet of the Additional District Judge, No. 1. Jaipur City in the suit dated December 16 1977, shows that copies of the plaint were delivered to the defendants Nos 3 and 4 on that day and both the defendants Nos. 3 and 4 sought a long adjournment for filing their written statement son the ground that the valuation of the suit wag more than Rs. 1,00,000/ and they wanted to look into the documents. The court, therefore, with the consent of the counsel for the plaintiff, adjourned the case 4o February 4, 1978 on the last mentioned date, defendant No. 3 filed an application under Section 34 of the Arbitration Act, praying that the proceedings in the suit be stayed, on the plea that the alleged agreement between the parties dated June 3, 1976, contained an arbitration clause In para 3 of his reply to the application of the defendant No. 3, the plaintiff specifically stated on February 15, 1978 that on December 16, 1977, the defendant No. 3 had sought time for filing the written -statement and as such the application under Section 34 of the Arbitration Act was not maintainable The defendant No. 3 filed a rejoinder dated March 15, 1978, in answer to the plaintiff's reply dated February 15, 1978 and the same was also supported by an affidavit. But neither in the rejoinder dated March 15, 1978 nor in the affidavit filed by the appellant defendant No. 3 Gokulchand in support thereof, the averment made by the plaintiff in his reply dated February 15, 1978 that the appellant had sought time on December 16, 1977 for filing the written statement was denied on the other hand, defendant No. 3 generally averred that he appeared in the court on December 16, 1977 and filed a vakalatnama and asked for a copy of the plaint, which was supplied to him and the case was fixed for February 4, 1978 for filing the written statement and, thus, 'legally speaking' February 4, 1978 was the date fixed for filing the written statement Here the defendant appellant failed to state as to whether time was sought by him or not on December 16, 1977 for filing the written -statement and as to whether a long 'adjournment was given. on that day by the trial court for filing the written statement at his instance or by itself or on the request of defendant No. 4 only, as it is sought to be suggested now. The trial Court considered the Conduct of defendant No. 3 in this respect and held that the same amounted to submission to the jurisdiction of the court and was a step in' furtherance of the progress of the suit. It was also held by the trial court that in his application dated February 4, 1978, defendant No. 3 did not demonstrate his readiness and willingness to proceed with the arbitration. Consequently, the application for staying the proceedings in the suit under Section 34 of the Act was rejected by the learned Additional District Judge, No. 4 Jaipur City on March 20, 1979.

(3.) THE question as to what constitutes 'step in the proceedings' for the purpose of Section 34 of the Arbitration Act has been authoritatively determined by a Division Bench of this Court in joharimal and Ors. v. Fatehchand and Ors. wherein the test in this respect has been laid down as under: On principle and judicial authority, we consider that the following propositions may be easily deducted: (1) An application for time to file written -statement or any other similar application should not be treated as a matter of law a 'step' in the proceedings. In order to constitute a 'step', it must be of such a nature as to lead the Court to the conclusion that the party prefers to have his rights and liabilities determined by the Civil Court rather than by the domestic forum upon which the parties might have agreed. It must display an unequivocal intention to proceed with the suit and to abandon the right to have the matter disposed of by arbitration. (2) The test, however, should not be subjective and a party can not be entitled to say that he had no actual knowledge of the right under the arbitration agreement and that in fact he did not intend to give up his right. On the other hand, the test must be objective and a person, shall be deemed to have taken a step under Section 34 of the Act, if it can be held that he could have actual or constructive knowledge of his right in the event of exercising due diligence and that inspite of that he participated in the proceedings of the Court. (3) Prima facie, an application for time to file written -statement should raise a presumption that the defendant had actual or constructive knowledge of his right and that he acquiesced in the method adopted by the plaintiff. The presumption, however, is not absolutely irrefutable & can be rebutted by showing that even constructive knowledge cannot be imputed to the defendant. It is, however, not proper and fair to lay down that the presumption can be rebutted only on the ground that the defendants did not receive the copy of the plaint. In rare and exceptional cases, it may be rebutted by other circumstances, such as appearance of a Government counsel without getting instructions in a particular case to appear. It is not desirable to enumerate the exhaustive list of the circumstances & to make generalization and each case should be considered on its own facts and circumstances. The aforesaid tests laid down by the Division Bench of this Court in Joharimal's case have been approved by their Lordships of the Supreme Court in the State of Uttar Pradesh and Anr. v. Janki Saran Kailash Chandra and Anr. : [1974]1SCR31 and their Lordships held that Joharimal's case enunciates the correct tests in such cases.